bending the cost curve global best practices · bending the cost curve global best practices 1–2...

Bending the Cost CurveGlobal Best Practices

1–2 March, 2012Stellenbosch

Proceedings Report

Stellenbosch

The views and opinions expressed in this document are those of the roundtable participants and not necessarily of the speakers. All comments were made off-the-record.

1

Introduction

On 2 March, 2012, PwC, in conjunction with sponsoring organisation McGill University, convened the fourth of a series of symposia called Bending the Cost Curve: Global Best Practices. The symposia have been held on four continents in 2011 and 2012. The objective has been to bring together the world’s leading healthcare experts to explore the common challenges of containing healthcare costs, improving access and quality, and disseminating emerging best practices among global healthcare leaders.

2 Bending the cost curve

The story so far

Our inaugural symposium was held in February 2011 in Washington, DC, with a keynote speech by Kathleen Sebelius, Secretary of the US Department of Health and Human Services. In June 2011 the stage then moved to Amsterdam, the Netherlands, where the proceedings were introduced by The Right Honourable Alan Milburn, former Secretary of State for Health with the British Labour Party. For the November 2011 event in Singapore the audience was addressed by Mr. Gan Kim Yong, Minister for Health, Singapore. The keynote speech for the fourth symposium in South Africa in March 2012 was delivered by Sir Richard Feachem, Professor of Global Health, University of California San Francisco and University of California Berkeley; Director, UCSF Global Health Group California, United States.

Each symposium has consisted of a full-day roundtable discussion, where the participants listened to and discussed five innovative case studies that successfully met the challenge of cutting costs, introducing efficiencies, increasing access and enhancing quality of care.

Over the course of the four events the attendees have enjoyed compelling discussions on a broad and challenging series of case studies from Lesotho, Singapore, the United States, Spain, India, Australia, the Netherlands, Abu Dhabi, Kenya, Canada and the UK. Each case was carefully chosen to expose roundtable participants to new models and spark candid debate on methods, unintended consequences and the likelihood of transferability. Together those in attendance looked at ways to bend costs through innovation, integration, shared risk, patient engagement, technology, standardisation, specialisation, regulatory intervention, collaboration and new incentives.

Across the first three symposia a number of important themes emerged from the case studies and subsequent discussions:

LeadershipIf health systems are to meet twenty-first century demands, they must embrace change as the new normal and, like other industries, continuously address new and evolving business models. This calls for strong, agile leadership that can navigate complex political and economic environments, remain sensitive to all stakeholders, and move forward purposefully once these stakeholders have bought into the solution.

Integrated careIntegrated delivery systems – that align incentives between payers and providers – can bring more value to stakeholders, but this transformation has to be carefully managed to win clinician and public acceptance. Competition on unit price alone won’t improve cost or quality, so more holistic approaches are needed.

Public-private partnerships (PPPs)PPPs that move ‘beyond the build’ of infrastructure to clinical service delivery are likely to bring more value. By leveraging the efficiencies and innovations of the private sector, governments can meet their promise of access and quality.

Process improvement in hospitalsAlthough in its infancy, the aggressive adoption of hospital process improvement methodologies can significantly increase productivity, which not only cuts operating costs substantially but also creates new capacity within the existing infrastructure.

3

Geriatric care innovationsThere is great potential for enhancing care for the elderly in both hospitals and the community. Traditionally high-cost delivery centres (such as tertiary care centres) can radically improve their care and business models for geriatric populations – even when patients are institutionalised. These advances can reduce the cost of care and free up the institutions to become more productive in other service lines.

Data analyticsHealthcare is taking advantage of digital technologies (although it lags behind other industries), as the public sector globally focuses on developing and implementing institutionally based electronic medical records. At the same time, personal mobile healthcare technologies are proliferating, creating new consumer (patient)-centric demands. Digitisation empowers both healthcare systems and patients by making available new information on patient preferences, service delivery and clinical outcomes. The public sector must encourage these developments by promoting the use of data analytics where there is standardisation, portability, and privacy; however such efforts should not hinder continued ‘leapfrog’ advances made possible through new real-time observations and measurement. The overall potential for cost efficiencies and quality improvement are great.

The ‘industrialisation’ of healthcareHealthcare is moving from a population-based to a precision-based industry. With the blossoming of personalised medicine, fuelled by a growing understanding of the human genome, healthcare is heading towards a new era of customisation. While empiric, population-based studies will remain important, measurement is moving up to new levels, enabling waste and quality to be gauged and predicted far more precisely. As with other industries, healthcare will ‘industrialise’, which should reduce costs and stimulate noticeable quality improvements.

‘Care anywhere’ – the enabling power of technologyWhether in the hands of individuals or institutions, technology frees patients to be treated anywhere, at any time, by a much broader array of carers. Consequently business models are changing, and for the first time high-value, low-cost chronic care is becoming available to even the poorest of populations. Although this revolution is powered by economic necessity, it will certainly migrate to wealthier nations facing the tidal wave of ageing and chronic disease. Telecommunications and mobile health companies feature large in these new models.

Clusters – creating sustainable health economiesBioclusters can revitalise entire cities and regions by creating new and vibrant healthcare economies that provide specialty services, professional education and basic science and clinical research. Bioclusters promote innovation and job creation to enrich regions, acting as shining examples of public-private cooperation. The success of bioclusters shows that healthcare can generate value and wealth and needn’t always be viewed as a cost ‘problem’.

Discussions at the fourth symposium in South Africa generated further themes that will be of vital importance in health systems’ efforts to bend the cost curve. The following case studies were chosen as leading practices with the potential for application in other markets and geographies. Each summary gives some useful background, details about the case itself and issues that may arise in their wider utilisation.


Session 1Fighting chronic disease through mobile coaching

BackgroundThe rise in mobile phone ownership creates huge opportunities for remotely tackling chronic diseases, helping to cut costs and empowering patients to take greater control over their own health.

Chronic conditions are the number one cause of death and disability globally, putting an enormous and increasing burden on all healthcare systems. Prevention and early intervention are a big step towards the ultimate aim of making populations healthier through better lifestyles.

In the consumer age, a more informed and engaged patient can be at the centre of new, cost-effective models of care that have less dependence upon facilities and practitioners. This requires a big leap of faith for providers, who must avoid deluging patients with excess information and also overcome issues such as privacy and data security.

Technology is the force that brings together the various stakeholders including patients, clinicians, complementary healthcare providers, informal caregivers, government, insurers and employers. By applying information technology (IT) intelligently to integrated care, it’s possible to change behaviour, bring down the incidence of disease and cut the cost of treatment.

Mobile health (mHealth) is growing exponentially, with hundreds of millions of people already using various mobile applications. Diabetes, obesity and hypertension are seen as the three chronic diseases with the highest potential for mobile management through the application of phones and web-based solutions.1

Case study

WellDoc Inc., US

Case introduction

Dr. Sarah Muttitt, Chief Information Officer,

Ministry of Health Holdings, Singapore

Speaker

Dr. Anand K. Iyer, President & Chief Operating

Officer, WellDoc Inc.

5

Case studyA recent US trial demonstrated the benefits of mobile phone-based coaching and online clinical decision support for diabetes patients, cutting the costs of treatment and empowering patients to take greater control over their condition.

Traditional approaches to managing diabetes have focused too heavily on the costly treatment of acute, episodic events rather than on prevention and on-going patient self-management. Patients tend to be assessed on a periodic basis using general clinical guidelines that fail to recognise each individual’s unique personal (and changing) physiology, levels of health literacy and a plethora of psycho-social and behavioural determinants.

Although telephone-based disease management has been around for several decades, the practitioner typically relies on verbal responses from the patient which only enables broad advice. This is particularly limiting for a condition such as diabetes, where patients need to manage their blood glucose levels, medications, diet, exercise, etc. frequently on any given day.

By taking advantage of the near universal coverage of mobile technology, WellDoc has created a system of instant feedback and coaching driven by clinical, evidence-based guidelines and behaviour science. Patients can enter blood glucose levels and other self-care data into their phones

– both feature as well as smart – and receive real-time responses from “virtual case managers” (in the form of an expert cloud-based software system), providing assistance on managing the condition as well as more general tips on diet, exercise and other aspects of their lifestyle.

The system can also produce ongoing, evidence-based reports of great use to the patients’ clinicians, helping them monitor their conditions more accurately. WellDoc’s application has been approved by the US Food and Drug Administration, works on the vast majority of data-enabled mobile phones and can be integrated into the standard software and electronic health records used by doctors. The company is now looking at potential applications in other disease states and parts of the world.

A 2009-2010 US trial of the WellDoc system sought to reduce blood glucose levels in 163 patients suffering from diabetes, with each participant receiving a glucose meter and supplies, along with a mobile phone application and access to a web-based portal.

The results showed a mean decline in A1c (glycated haemoglobin – the gold-standard measure for diabetes control) by 1.9% in the intervention group (against 0.7% in the usual care group). A clinically significant change in A1c was seen, regardless of whether patients began the trial with a high or low A1c. As an indication of how impressive these results were, the US Food and Drug Administration considers a new drug that is able to reduce A1c by 0.5% as clinically significant.

Such results offer real hope for slashing the estimated $218 billion spent annually on diabetes in the US,2 with potential annual cost savings per patient of as much as US$10,000 in reduced healthcare charges and increased worker productivity.3 4 5 Perhaps even more importantly, the approach enables patients to gain more control over their condition and make better decisions on a daily basis, which should enhance the lives of millions of patients who suffer from diabetes. Remote-based coaching of this kind also has considerable potential for other chronic diseases.

1 The impact of smartphone applications on the mobile health industry (vol. 2), Mobile health market, Report 2011-2016, research2guidance, 9 January 2012.

2 Figures for the Centers for Disease Control and Prevention (2010) and the American Diabetes Association, 2009.

3 Milliman, 2011.4 Medication adherence leads to lower health care

use and costs despite increased drug spending, Roebuck MC, et al. Health Affairs (Millwood) (1):91-9, Jan 30 2011; Hospital Stays for Patients with Diabetes, Fraze T, et al. 2008; Statistical Brief #93. Healthcare Cost and Utilization Project (HCUP) Statistical Briefs [Internet]. Rockville (MD): Agency for Health Care Policy and Research (US); Aug 2006-2010.

5 Testa MA, et al. Health Economic Benefits and Quality of Life During Improved Glycaemic Control in Patients With Type 2 Diabetes Mellitus. JAMA 280 (17):1490-6, Nov 1998.


Sustaining results over timeAccording to one participant: “By personalising the messages very closely to the recipient’s personal style, it’s possible to keep the system fresh and interesting and dynamic. This could include games and other tactics to encourage patients to stay involved and committed.” Over time it may be possible to combine a mobile phone and the medical device into one handset, which makes the testing more convenient. And because many people have more than one chronic disease, it will be possible to manage diabetes, hypertension, obesity and other conditions off the same application, which will manage the comorbidities and improve compliance.

Adapting the solution to other markets In emerging countries, some segments of the population are less educated, with limited access to healthcare, and won’t understand blood glucose levels – some may not even test their levels. In these cases the communications would have to be pitched at a more basic level with information on diet and activity as part of a wider awareness campaign. Applications should also be customised to different cultures and languages, different forms of medicine and different forms of communication (in China, people approach logic in a radically different way). And the solution will also have to be deployed and hosted locally, as information can often not be exported over geographical boundaries due to data protection laws.

Discussion: how to implement this model on a wider basisAligning solutions with the health system’s infrastructure As applications of this type proliferate, there should be common standards and infrastructure that can receive, process and store the data within the healthcare system on a single, accessible database. This requires collaboration between health systems, software vendors, large care networks and hospitals and physicians’ associations. Telecommunications companies also have a role in enabling connectivity within patients’ homes. However, care must be taken to avoid building huge, expensive monolithic systems that are too rigid to handle new solutions such as WellDoc, so flexibility is a key ingredient to encourage continued innovation.

Integrating mobile coaching into everyday healthcareThe WellDoc solution has a number of business models: firstly to help pharmaceutical companies increase compliance to their products; secondly to assist existing call centres in serving their patients more effectively; thirdly to allow general practitioners to prescribe the service to their patients and be reimbursed, which benefits the doctor and the patient and saves costs for the overall system.

Complying with legal/medical guidelinesThe contract with the health systems should cover the possibility of patients entering incorrect data and thus receiving potentially harmful responses. It’s also vital that the doctor is not obliged to respond continually to changes in the patient’s condition and controls how he/she receives reports, with the patients recommended to call emergency services or attend a hospital in the event of an emergency.

7

Case Study

The Queen 'Mamohato Memorial Hospital PPP,

Lesotho

Case Introduction

Sir Richard Feachem, Director, Global Health Group,

University of California, San Francisco; Professor of

Global Health, University of California, San Francisco

and University of California, Berkeley, US

Speaker

Honourable Minister Tim Thahane, Minister

of Finance and Development Planning, Lesotho

Session 2Working towards an integrated private/public health system

BackgroundTo improve healthcare in poorer, emerging countries, governments must embrace cultural change by introducing the kind of operational efficiencies commonly associated with private sector providers. However, such a transformation calls for strong political will and commitment.

Behind most major health sector reforms is a senior political sponsor with two important characteristics: firstly, a clarity of vision enabling her/him to ‘sell’ the reform effectively to win the necessary consensus from a range of stakeholders; secondly, the boldness to push forward change, often against the prevailing political mood.

Such qualities are especially relevant when attempting to increase the role of the private sector in a public-oriented health culture, where the government has a near-monopoly in health finance and provision and the population is accustomed to the state delivering healthcare.

Yet many government-run health systems across the developing world are in disrepair, with dilapidated facilities, lack of equipment and chronic staff shortages, which, along with inefficient management, can lead to low service quality and poor clinical outcomes. Faced with a growing burden of chronic conditions as well as infectious diseases such as AIDS, tuberculosis, malaria and diarrhoea, governments lack the resources to develop the healthcare infrastructure they need – and the experience and technical knowledge to get the most out of existing private providers.


Lesotho, a landlocked state in Southern Africa and one of the world’s poorest nations, faced this challenge. Its only tertiary hospital was outdated and consuming increasing amounts of public funds, while delivering poor and deteriorating services. With limited investment resources and a de-motivated workforce, the government urgently needed a modern facility that would raise standards and attract talented doctors and health professionals to work in Lesotho. Certain key figures in the government felt that private providers could bring in much-needed efficiencies, yet the strong socialist ethic that had pervaded the country meant that any external involvement in healthcare was regarded with extreme scepticism.

Case studyLesotho’s new Queen 'Mamohato Memorial Hospital is a bold collaboration of the public and private sectors, with the new provider co-financing, building, operating multiple public health facilities and delivering all clinical and non-clinical services. This groundbreaking initiative has been made possible through the political courage and commitment of leaders in government.

Hon. Tim Thahane, Lesotho’s Minister of Finance and Development Planning had a vision of an innovative public-private partnership (PPP) that went far beyond the traditional ‘design-and-build’ concept to include full provision of clinical and non-clinical services. He believed that such an arrangement would maximise the commitment of the private operator and improve performance.

In order to bring the private and public sector together in this way, Minister Thahane first had to convince the Prime Minister, the cabinet and

– most importantly – the Minister of Health of the value of such a relationship. By passionately arguing his case, he gained consensus, agreeing that any PPP must be highly transparent in order to win public permission. The Ministries of Finance and Health have subsequently developed a close working partnership to retain a focus on fiscal and healthcare policy goals. Employees from both ministries sit alongside each other in the same building to cement the team atmosphere.

Having produced a detailed business case, the procurement process began, with an implicit understanding that any bidders had to have good prospects of a reasonable return on their investment. Minister Thahane believed that to attract interest, the public sector had to provide a stable legal and regulatory environment that would reduce the risk for the new operator, along with a fully transparent tender process.

The Lesotho government is keen to recruit and develop talented healthcare professionals, and therefore the contract with the winning bidder (private provider Netcare, who heads a consortium) includes training healthcare workers from all over the country, with the intention of strengthening the entire Lesotho healthcare system.

The success of the new hospital has meant that there is very high demand, with patients travelling long distances to attend clinics, which puts pressure on the Lesotho government to bring the country’s other facilities up to the same standards.

Through a clear political vision and strong, continued commitment, the new hospital is a major step on the road to improving healthcare across Lesotho at an affordable and predictable cost to the government. By bravely challenging the accepted approach and opening up the state health service to new, private sector ideas and ways of working, Minister Thahane has helped to educate public policymakers about the benefits of integrated PPPs, also known as public-private integrated partnerships (PPIPs).

9

Discussion: how to implement this model on a wider basisBuilding new skills sets within governmentAs the government changes its traditional role from service provider to commissioner, its staff will have to learn new skills in business partnering, contract management, procurement, regulatory affairs, measurement and monitoring. One participant noted that: “By and large, the public sector doesn’t have the capability or capacity to act as a sophisticated commissioner, and so to make PPPs work, it has to bring in new forms of additional capacity and capability, alongside a quite different mindset.” Health ministries therefore need to train existing staff, recruit new talent and utilise outside assistance when necessary.

Digging in for an extended debateExperience in other markets such as the UK and the Netherlands illustrate the embedded views of politicians, trade unions and the general public, many of whom believe that healthcare should always be controlled by the public sector. Even after the initial PPP process has begun, opponents (quite possibly from within their own party) will seek to undermine the venture and may even pay consultants to carry out critical reviews that show it’s not offering value for money. One symposium attendee summed up the resilience required when she said: “To win public support you must be prepared to bite the bullet, stand up for what you believe in and above all make sure there’s evidence to back up your argument.”

Coping with political changePolitical champions and indeed governments will inevitably move on, so it’s vital to integrate the PPP philosophy into the everyday thinking and operations of government. Training, workshops and cross-departmental initiatives can all play a part in institutionalising the concept, so that projects can survive changes in leaders and parties.

Maintaining competitiveness and value for moneyIn a regulated market with long-term contracts with terms typically 15 years and longer, each provider has a virtual monopoly in its own region and there’s a danger that the government may be locked into inflexible agreements that offer less value than anticipated. By constructing a highly open and competitive bidding process and applying strong negotiating skills to the procurement process, the public sector reduces the risk of an unfavourable deal. An independent advisor/assessor can be of great benefit, both before and during the negotiations, as well providing ongoing assessment of the service levels.

Choosing the right partnerPotential partners should have a deep understanding of the risk and return appropriate to the market, particularly when considering investing in emerging regions such as Africa. Governments must be careful to select partners with a genuine long-term commitment, and engage in continuous, open and transparent dialogue, with any problems positioned as joint challenges and not blamed on either party.


Session 3Breaking down the barriers between private and public service

BackgroundAlthough potentially a higher risk venture, a fully integrated PPP can help health systems enjoy the full benefit of private sector knowledge and experience – and over time bring strong returns to investors.

Eighty per cent of healthcare costs involve delivery of services, but the vast majority of PPPs are restricted to the design, build and operation of the facilities. Until recently, the only notable examples of fully integrated partnerships were in Valencia, Spain and the Turks and Caicos Islands, where the private operator combined infrastructure and clinical services.

So, when the Lesotho government issued a tender for its new Queen 'Mamohato Memorial Hospital, observers from Africa and beyond were intrigued to see what kind of bidders would take on the risk of a comprehensive PPP in a poor, emerging country. Despite these concerns, the chosen partner

– a consortium headed by South African healthcare group Netcare – was confident that it could meet the demands of the contract and give a respectable return to its shareholders.

The pressure to succeed is intense, with both Netcare and the Lesotho government staking their reputations over such an innovative and high-profile initiative. With the hospital now completed and up and running, the early results are very positive and suggest that this new transformational approach could be a model for the rest of Africa and indeed the world to follow.

Case study

The Queen 'Mamohato Memorial Hospital PPP,

Lesotho

Case introduction

Lady Neelam Sekhri Feachem, Chief Executive

Officer, Healthcare Redesign Group

Speaker

Dr. Richard Friedland, Chief Executive Officer,

Netcare Limited

11

As demand for healthcare continues to rise rapidly, there is a pressing need to bend the cost curve to offer affordable care for all. Integrated PPPs give private providers greater scope for efficiencies, as they have more control over practitioner practices and primary care screening. In taking on this project, Netcare, the largest private hospital group, primary care network and medical emergency service in South Africa, is focusing heavily on enhancing performance through the introduction of new, improved practices and procedures. In addition to enhancing Lesotho’s healthcare system, such improvements also enable Netcare to realise positive cash flows.

Case studyThrough standardisation of procedures, intensive staff training, independent monitoring and a strong commitment to a fully integrated care system, private provider Netcare is helping to enhance the region’s healthcare and justify the faith of the Lesotho government and Netcare’s investors.

Netcare considers the Queen 'Mamohato Memorial Hospital to be its most important and high-risk undertaking anywhere in the world. From the moment the tender was awarded, it has strived to demonstrate that a private sector provider can enhance the service to all patients and offer the Lesotho government value for its investment, as well as providing a sound business case to its own shareholders.

This initiative is viewed as a wonderful opportunity to break down perceived barriers between the public and private sectors, by offering what Netcare Chief Executive Officer Dr. Richard Friedland refers to as a ‘low-cost airline model’, where public and private patients use the same facilities, doctors and nurses.

Efficiency is at the heart of everything that Netcare does, with a high level of standardisation of procedures based upon clinical evidence, and a strong focus on outcomes. Digital fingerprinting requires all staff, regardless of rank, to ‘clock in’, which ensures that every employee works his or her full contractual hours – which is quite unusual in the region.

Training and skills transfer is another top priority in order to raise the standards of clinicians, nurses and other healthcare workers – not just in the hospital but across the country, which should also reduce the flow of patients from more remote regions, as their local primary services would be improved. Netcare is providing extensive education on clinical techniques and practices, as well as building technical ability to get the most out of the new, advanced facilities such as MRI scanners, ventilators, intensive care units and a level one trauma unit. The hospital will ultimately become Lesotho’s primary clinical training facility for health professionals, a further sign of the value it brings to the overall health system in Lesotho.

The Queen 'Mamohato is arguably the best hospital that Netcare has ever built and, not surprisingly, is attracting huge numbers of patients. To cope with such a deluge, there is a gateway clinic at the entrance of the hospital that filters people, prioritising important cases and passing on less- critical patients to the local primary care network.

Given the high-profile nature of the PPP, the Lesotho Ministry of Health and Netcare are both keen to be completely transparent to maintain credibility amongst all stakeholders and soothe any mistrust of the private sector. Through robust contract management (which has benefited from external technical experts) and totally independent monitoring, the new hospital’s achievements have been verified objectively and impartially, which gives great credibility to the venture.

Netcare’s total commitment to clinical excellence is combined with a strong commercial edge, with the company on target to deliver the planned financial results. Investors must be patient, as ventures of this nature typically take 10 to 12 years before showing a positive return on capital.

Despite huge opposition to the original idea, the hospital is proving an undoubted success, justifying the faith of the Lesotho government (and in particular of Hon. Minister Tim Thahane, Lesotho’s Minister of Finance and Development Planning) and acting as a beacon of public/private collaboration to offer high-quality, affordable healthcare even in the poorest of nations.


Discussion: how to implement this model on a wider basisPutting together a realistic investment casePPPs of this nature require a long-term commitment, as the private provider has to maintain and refurbish the facility and return it to the government in pristine condition at the end of a lengthy contract. To create value for its shareholders, Netcare is seeking a return on invested capital over the 18 years of the project, using a model based upon cash flow return on investment. Given the relatively high borrowing, the first returns are expected around year 10, which is not uncommon for such a capital- intensive undertaking. From the public sector’s perspective, the full benefits of the investment must be calculated and broadcast, as an attendee noted:

“You can’t just look at the cost of the facility; benefits will accrue in time and include factors such as greater workforce productivity and fewer days lost in school due to a healthier population.”

Tailoring the design to current and future needsThe Queen 'Mamohato’s design reflects the mountainous terrain of Lesotho and has a huge outpatients’ department, plus wide corridors and space for family members, as many patients travel long distances with close relatives, who cannot return home during the treatment period. Any facility should also have the capacity to cope with anticipated demand in 10 or even 15 years’ time, to avoid additional capital expenditure in future years.

Building trustAs one participant explained: “Failure isn’t an option.” With many critics waiting for an opportunity to highlight any failures, providers should be sensitive to potential negative publicity. Although demand may be high, it’s unwise to turn patients away as this could be construed as ‘cherry picking’ more profitable cases. As mentioned, independent monitoring will help confirm that standards are being met; by developing key performance indicators jointly with the medical staff, doctors will be more motivated to achieve the agreed target.

Changing the clinician cultureIn certain regions the overall working conditions are not considered attractive, which makes it hard to attract high quality health professionals. It’s not uncommon for doctors to insist upon a number of perks, including the option to work shorter hours in order to hold private clinics. By providing state-of-the-art facilities, the Queen 'Mamohato is seen as a highly desirable place to work for clinicians from all over the world, who subsequently agree to fair contracts that ensure a full working week.

Moving towards full integration The greater the control that the private provider has over primary care, the more chance it has of making a positive impact upon overall health levels. Netcare rebuilt and has responsibility for three separate primary care facilities that feed into the main hospital, and is closely involved in community public health programmes. All of this will help to influence issues such as immunisation and other forms of health education and prevention, which should help improve overall levels of health and wellness. Integration also leads to better clinical decision-making, as the provider can take a more holistic view of a patients’ health, knowing that it is responsible for all the primary and tertiary costs.

13

Session 4How SMS technology can fight the spread of counterfeit drugs

BackgroundThe blight of drug counterfeiting is impacting markets around the world and causing death and misery to millions.

Drug counterfeiting is a worldwide phenomenon and a crime against society, with products containing inert ingredients packaged and sold in a deadly trade that kills thousands of innocent people. According to the World Health Organization (WHO), 200,000 people die every year from sales of substandard, counterfeit malaria medication.6 There are a number of different variants: products without active ingredients; products with the wrong ingredients; products with incorrect quantities of active ingredients; products with correct quantities of active ingredients but with fake packaging; and finally, products with high levels of impurities and contaminants. If the product contains small quantities of the active ingredients, there is a chance of resistance spreading, which could be catastrophic for diseases such as malaria and HIV/AIDS.

It seems that few drug groups are immune to the threat, with antibiotics, antimalarials, hormones, steroids, anticancer, antiviral, analgesics and antihistamines all victims of counterfeit activity. Although nowhere is safe from the threat, it’s in emerging nations that the practice is most rife, with the WHO estimating that in some countries as many as one in three drugs sold are fake.7

Case study

The m-Pedigree programme in Kenya, Cameroon

and Ghana

Case introduction

Mr. Rafael Gual, General Director, Chamber of the

Pharmaceutical Industry, Mexico

Speaker

Mr. Thierry Zylberberg, Executive Vice President,

Strategic Partnerships and General Manager,

Health Business, France Telecom

6 World Health Organisation website: http://www.who.int/mediacentre/factsheets/2003/fs275/en/

7 Medicines and Healthcare products Regulatory Agency (MHRA) (UK) figures 2012.


Counterfeiters are normally well-organised criminal groups, and tracing them is a major challenge, with manufacturing facilities hard to track down and easily dismantled. The complexity of the supply chain adds to the task. For example, in February 2012 it was announced that fake versions of Roche’s cancer drug Avastin were circulating in the US, with the product travelling in a zigzagging route that may have included Turkey and Egypt before being sold to Swiss, Danish, UK and finally US wholesalers.8

Case studyThanks to simple mobile technology, patients and clinicians in Kenya, Cameroon and Ghana can now check whether drugs are fake by sending a single SMS, receiving an instant verification.

It’s hard to overestimate the cost of counterfeiting. One expert believes that the global market for fakes could be worth between US$75-$200 billion – a year9 in lost revenue for pharmaceutical companies. The practice could even jeopardise national and international investment in research manufacturing facilities, marketing and distribution.

However the biggest cost is arguably to society as a whole in the form of additional treatment and especially in lost lives of those who could otherwise have made a productive contribution to a nation’s wealth over a lifetime. The 200,000 deaths a year attributed to malaria alone could potentially cost billions to the countries affected. The WHO estimates that malaria can decrease annual gross domestic product (GDP) by as much as 1.3% in countries with high levels of transmission, while in some countries the disease accounts for up to 40% of public health expenditures, 30-50% of inpatient hospital admissions and up to 60% of outpatient health clinic visits.10

Given these staggering sums, it’s no surprise that there are concerted efforts to help health systems and the pharmaceutical industry secure the global supply chain for drugs. The WHO has been working with government agencies and manufacturers around the world to create a database of products, giving each packet of medicine a unique number. And in an innovative new initiative from mobile phone company Orange (part of France Telecom), these markings can now be tracked at any point in the distribution pipeline using widely available and relatively inexpensive technology.

The system is a collaboration between Orange and a non-governmental organisation called m-Pedigree and is very simple for users and/or clinicians. Each pack has a batch number and expiry date, along with a one-time code that is only revealed by scratching the covering ink. The code number is sent by SMS to a server, which sends an instant response verifying whether the drug is real or fake.

The code on the packages is a one-off encrypted number that incorporates the batch code and expiry date, so the system is relatively foolproof.

The costs are minimal and initial trials in Kenya have been very successful, with thousands of messages sent to the server, suggesting that such an approach has a huge potential for wider application in both emerging and mature markets. Once trials have been completed, there are plans to develop a sustainable business model with non-profit organisations, government agencies and pharmaceutical companies.

8 Drug Distributor Is Tied To Imports of Fake Avastin, Wall Street Journal, 7 March 2012.

9 Poison pills: Counterfeit drugs used to be a problem for poor countries. Now they threaten the rich world, too, The Economist, 2 September 2010.

10 WHO estimates http://www.who.int/mediacentre/factsheets/fs094/en/

15

Discussion: how to implement this model on a wider basisApplying the appropriate business modelThere are a number of ways to approach this form of anti-counterfeiting:

a. Existing model: the m-Pedigree model has worked effectively in Kenya, where Orange has a large proportion of the consumer market. Ultimately the system must incorporate all the country’s mobile telecommunications providers, who will have to view the venture as a purely non-profit activity in the interests of corporate social responsibility. However, if a consumer is given a ‘false positive’ – i.e. is told a drug is authentic when in fact it is not, this could damage the brand of those associated with the system.

b. Government-controlled: by insisting that all drugs sold in the country must be part of the verification system, governments can create a safety net for its citizens. Such an approach requires government and pharmaceutical companies to work together to ensure that all packs are labelled, with the telecommunications providers likely to offer unbranded network access. This would probably be free to citizens.

c. Pharmaceutical industry-controlled: the drugs manufacturers would be responsible for ensuring that products were genuine and would market the service to consumers. In most countries pharmaceutical companies are forbidden to communicate with consumers, so the various players could work together to carry out unbranded campaigns from the industry in general, which would benefit everyone. One major challenge is achieving certainty of authenticity, as the recent Avastin case illustrates.

Educating the consumerRegardless of the business model, the various stakeholders – government and the pharmaceutical industry – need to invest in a long-term awareness programme to ensure that consumers, pharmacists and clinicians use the verification system. The m-Pedigree trial in Kenya found that usage dropped off quickly after the initial communication programme ceased. Every pharmacist should be trained in the system and encouraged to explain it to all their patients.

Creating a secure supply chainThis is by far the biggest challenge facing the industry, and one that mobile technology alone cannot resolve. One option is to simplify the chain by only working through carefully accredited wholesalers/suppliers to avoid a repeat of the recent Avantis episode, where it was very hard to trace the past movement of the products. These suppliers could then deal directly with the pharmacies and the database. However, the only way to gain greater universal security is to digitise the entire supply chain, enabling a package to be tracked in real-time anywhere in the world, comparable to the systems used by major global logistics companies. Such a move would take a significant and combined investment on the part of the industry as a whole, involving a wide range of stakeholders, amongst them the WHO, the Global Fund, pharmaceutical companies, wholesalers/suppliers, pharmacies and national governments.


Session 5Extending healthcare coverage across society

BackgroundAbu Dhabi has an ambitious plan to improve access to healthcare for its nationals and its large expatriate population.

Health insurance has only come recently to Abu Dhabi. Nationals have traditionally enjoyed free healthcare in public hospitals while the Emirates’ approximate 1.5 million expatriates, who make up around three-quarters of the population, have had to pay for services directly, (although these have been heavily subsidised).

So when the government decided in 2005 to roll out private health insurance via a public-private partnership with Munich Reinsurance Group, it had a broader vision of transforming the entire healthcare system to bring affordable access for expatriates, introduce world-class services and reduce the need for public subsidies. This in turn would encourage local and foreign private investment attracted by a predictable insurance revenue stream.

The Emirates’ centralised government enables fast decision-making and its undoubted wealth means that there are significant funds available to invest in every aspect of the health system. Nevertheless its objective of comprehensive coverage in just a few years was highly ambitious and necessitated the development of an entire infrastructure to cope with claims and billing, plus a system of regulation in place for all major stakeholders, businesses, insurers, medical services and pharmaceutical providers and brokers.

Case study

Daman National Health Insurance Company,

United Arab Emirates

Case introduction

Dr. Frank Mayer, Managing Director Reinsurance,

Munich Health Region Middle East/Africa

Speaker

Dr. Sven Rohte, Chief Commercial Officer,

Daman National Health Insurance Company

17

The first step was a law making it compulsory for employers and business owners in Abu Dhabi to provide health insurance for their expatriate employees and creating a company named National Health Insurance Company-Daman to facilitate this law. Around the same time – February 2005 – a tender proposal was prepared, with Munich Re Group selected as a strategic partner in Daman which, at the time, was the first dedicated health insurance provider. Munich Re now owns 20% of Daman and the mandatory health insurance law has extended to include United Arab Emirates (UAE) nationals.

Case study In less than five years, Abu Dhabi – through Daman – has managed to achieve near universal health insurance coverage of its population, with well over two million members subscribed to the scheme.

To support this fast growth, Daman has built a substantial organisation to manage every aspect of the business, including sales and distribution and a team handling more than 1.5 million claims per month. Such a high volume of data has also provided excellent market insights that have helped gauge the health trends across the population.

Three different levels of product have been launched to address distinct market segments: basic, enhanced and a third category for UAE nationals. The Abu Dhabi government carries the risk of the subsidised basic product and the one for UAE nationals, while Daman/Munich Re carries the risk of the enhanced product range.

Daman’s early days were very much focused on establishing an organisation that could immediately handle 1.5 million expatriate members. To achieve this, the management created a strong sales and back office function to enrol members from businesses and government entity members, and launched a 24-hours customer service call centre and a number of service points at key government and popular areas to serve the growing membership numbers.

Education has also been a major priority, with an extensive marketing campaign to explain the principles of health insurance and the level of coverage. Many of the 1.5 million expatriates are relatively uneducated construction workers from different ethnic and cultural groups, so the communication techniques used had to be tailored to such an audience, including the use of pictures for those who can’t read.

Externally, Daman has worked hard to build consensus with key stakeholders and to ensure that the new system is simple and straightforward for the medical profession, the patients and the administrators. Over the past six years, Daman was a key driver in developing a health insurance industry with a professional infrastructure in Abu Dhabi. In collaboration with local authorities, it has built an insurance system infrastructure of international calibre within Abu Dhabi’s healthcare and pharmaceutical providers.

The system supported providers in handling more visitors efficiently as 99% of the population are now able to access public and private health facilities. It managed to ease authorisation for claims processing and payment, and includes highly-automated claims adjudication.

As part of the push for greater efficiency, Daman also worked in partnership with the Abu Dhabi government health regulator Health Authority-Abu Dhabi to introduce cost control measures, including paying hospitals on the basis of diagnoses rather than the duration of a patient’s hospital stay. Thanks to such advances, the treatment and cost structure have become far more transparent, with increased competition between clinics.

The outstanding success of the Abu Dhabi initiative has generated considerable interest among other health systems in the region and beyond, as they seek more integrated healthcare, alternative sources of funding and efficient treatment and payment processes.


Discussion: how to implement this model on a wider basisPreparing the environmentWhen introducing what may be a new concept to the majority of the population, products should be as simple as possible to help customers understand their levels of coverage and the procedures for making claims. Any changes in laws could cause costly changes to products and procedures, so it’s wise to maintain continuous dialogue with the regulators to ensure that all the products are in compliance. The insurance company should also work closely with the various service providers to create a smooth administration process that’s clear to all parties.

Balancing universal coverage with a competitive marketWhile a competitive insurance market can bring efficiencies, it may deter people from taking up insurance due to excessive premiums. Although 80% government owned, Daman has to compete with over 30 other private insurers for the middle-income segment of the Abu Dhabi market. However, for the lower-income segment the government was keen to achieve fast adoption, so this group still receives a subsidised offering that is priced well below anything that the private sector could match. Over time, it hopes to gradually reduce these subsidies and create greater competition.

Improving the overall health system Through close collaboration with clinical providers, insurers can help push for greater efficiencies, which should reduce pay-outs and government expenditure per patient. According to one participant: “This becomes a cost containment game, where the government takes an active purchasing role rather than just paying for healthcare. There are a number of ways for private insurers to put pressure on hospitals to be more efficient, including limits on treatment for a particular condition, and prescribed drug lists.” And by encouraging a push towards greater primary care, the level of gatekeeping should rise, which ultimately leads to fewer expensive hospital visits. Insurers can also be a driving force behind preventative medicine by offering mHealth services to counter chronic diseases such as diabetes.

Clamping down on fraudIn certain countries, fraud is far more prevalent, so insurers need to allocate resources for analysing claims data, in order to track any unethical behaviour and reclaim money wrongly paid. By receiving regular statements of charges, individual members can become better informed about their medical bills, helping them to spot any unusual amounts.

19

Conclusion

The five case studies contain some useful lessons that will aid healthcare systems around the world in their efforts to bend the cost curve: We’re only scratching the surface of mHealth The potential for remote mobile devices is huge, enabling patients to test and monitor an increasingly wide range of conditions in real time, and interact with intelligent systems to receive personalised advice and feedback. This not only cuts costs but also empowers individuals to take control of their own health and make better day-to-day decisions, which can reduce the impact of chronic disease and relieve pressure on the health system. Coping with the pace of new technological innovation With new IT applications proliferating, public and private health systems must find a way to regulate these solutions without curbing innovation and entrepreneurship. As patients take a more active role in the care cycle, clinicians and software providers require protection from the consequences of data entry errors or incorrect use of devices. Health systems also need to build infrastructures with the flexibility to accommodate new mHealth technology from multiple providers.


Institutionalising change Most health systems have entrenched cultures and values that are very difficult to reform, particularly in countries where there is a long history of public provision. It’s not just politicians that need persuading; healthcare workers and the wider public must be educated in the benefits of new models of service, so that the change is institutionalised and can survive successive governments. The private sector can be a strong force for change Private healthcare companies should not just see themselves as service providers but as pioneers for improved practices, culture and behaviour. Clinical providers such as hospital groups can introduce new levels of efficiency and excellence through evidence-based standardisation, greater focus on primary care gatekeeping and comprehensive training of clinicians, nurses and other healthcare workers. Health insurance companies also have a role to play by influencing care providers to be more cost-conscious through treatment limits, prescribed drug lists and a stronger focus on primary care and outcomes. And through the use of mHealth, private providers can raise overall health levels and reduce the burden on the health system. The war against counterfeiting calls for an alliance Simple solutions – such as verifying the authenticity of packaging via SMS batch number checks – can have a big and immediate impact upon the deadly trade in counterfeit drugs. However, in a complex supply chain involving many different parties, the long-term answer is complete digitisation of the product and its packaging, so that every step from manufacture to pharmacy shelf can be tracked continuously. Stepping up to such a level of security requires collaboration from every industry stakeholder and will take considerable time and investment.

21

Government’s role is changing With the increase in PPPs, government is moving from being a service provider to a commissioner, so public sector employees have to develop new competencies in areas such as business partnering, contract management, procurement, regulatory affairs, measurement and monitoring. Educating the consumer Whether introducing mandatory health insurance, spreading the use of mHealth or encouraging vigilance against counterfeit drugs, both the public and private sectors should invest in raising consumer awareness. A variety of communications channels can be used – including social networking – but messages must be repeated on a regular basis to achieve high penetration and stimulate positive action.


Agenda1–2 March, 2012

1 March, 2012

Dinner Keynote Speaker Sir Richard Feachem, Director, Global Health Group, University of California, San Francisco; Professor of Global Health, University of California, San Francisco and University of California, Berkeley, US

2 March, 2012 7:30–8:30 Registration and continental breakfast

8:30–8:45 Opening remarks

8:45–10:00 Session 1 Innovative mobile applications to manage chronic diseases

Introduction Dr. Sarah Muttitt, Chief Information Officer, Ministry of Health Holdings, Singapore

Case Study WellDoc Inc., US

Speaker Dr. Anand K. Iyer, President & Chief Operating Officer, WellDoc Inc.

10:00–11:15 Session 2 A public sector perspective of PPPs in Lesotho

Introduction Sir Richard Feachem, Director, Global Health Group, University of California, San Francisco; Professor of Global Health, University of California, San Francisco and University of California, Berkeley, US

Case study The Queen 'Mamohato Memorial Hospital PPP, Lesotho

Speaker Hon. Minister Tim Thahane, Minister of Finance and Development Planning, Lesotho

23

11:15–11:30 Coffee break

11:30–12:45 Session 3 A private sector perspective of PPPs in Lesotho

Introduction Lady Neelam Sekhri Feachem, Chief Executive Officer, Healthcare Redesign Group

Case study The Queen 'Mamohato Memorial Hospital PPP, Lesotho

Speaker Dr. Richard Friedland, Chief Executive Officer, Netcare

12:45–13:45 Lunch

13:45–15:00 Session 4 Counterfeit drug detection using mobile devices

Introduction Mr Rafael Gual, General Director, Chamber of the Pharmaceutical Industry, Mexico

Case study The m-Pedigree programme in Kenya, Cameroon and Ghana

Speaker Mr. Thierry Zylberberg, Executive Vice President, Strategic Partnerships and General Manager, Health Business, France Telecom

15:00–16:15 Session 5 Building a health insurance scheme from the ground up

Introduction Dr. Frank Mayer, Managing Director Reinsurance, Munich Health Region Middle East/Africa

Case study Daman National Health Insurance Company, United Arab Emirates

Speaker Dr. Sven Rohte, Chief Commercial Officer, Daman National Health Insurance Company

16:15–17:15 Concluding remarks and networking reception


Roster ofparticipants

Dr. Neil BaconChief Executive Officer, iWantGreatCare, UK

Dr. Christine BennettProfessor and Dean, School of Medicine, Sydney, The University of Notre Dame, Australia

Mr Antonio Chemor-RuizChief Executive, High Specialty Hospitals Division, State of Mexico

Mr. Holger EckoldtChief Executive Officer, UTi Pharma, South Africa

Lady Neelam Sekhri FeachemChief Executive Officer, Healthcare Redesign Group, US

Sir Richard FeachemDirector, Global Health Group, University of California, San Francisco; Professor of Global Health, University of California, San Francisco and University of California, Berkeley, US

Dr. Richard FriedlandChief Executive Officer, Netcare, South Africa

Mr. Rafael GualGeneral Director, National Chamber of the Pharmaceutical Industry, Mexico

Dr. Edwin HertzogChairman, Mediclinic International, South Africa

Mr. Denis von HoesslinHealthcare Leader, PwC, South Africa

Dr. Anand K. IyerPresident and Chief Operating Officer, WellDoc Inc., US

Mr. Glenn KeysManaging Director, Aspen Medical, Australia

(Hony) Brigadier Dr. Arvind Lal, Padma ShriChairman and Managing Director, Lal Pathlabs, India

Dr. El-Nasir LalaniDean of Research & Graduate Studies, The Aga Khan University, Pakistan

Mr. Theo LangejanChairman, NZa (Dutch Healthcare Authority), the Netherlands

Dr. Richard LevinSenior Scholar in Residence, Association for Academic Health Centers, US; Professorof Medicine, McGill University, Canada

25

Dr. David LevyGlobal Healthcare Leader, PwC, US

Dr. Frank MayerManaging Director Reinsurance, Munich Health Region Middle East/Africa, UAE

Mr. Danie MeintjesChief Executive Officer, Mediclinic International, South Africa

The Rt. Hon. Alan MilburnFormer Secretary of State for Health, British Labour Party, UK

Dr. Edith MohapiDirector, Baylor College of Medicine, Lesotho

Dr. Sarah MuttittChief Information Officer, Ministry of Health Holdings, Singapore

Dr. Ravi NaidooGroup Executive, Development Bank of Southern Africa, South Africa

Dr. Ayanda NtsalubaExecutive Director, Discovery Holdings, South Africa

Dr. Karen PrinsOperations Director, Queen 'Mamohato Memorial Hospital, Lesotho

Dr. Sven RohteChief Commercial Officer, Daman National Health Insurance Company, UAE

Dr. Olive ShisanaChief Executive Officer, Human Sciences Research Council, South Africa

Hon. Minister Tim ThahaneMinister of Finance and Development Planning, Lesotho

Mr. Craig TingleChief Financial Officer, Mediclinic International, South Africa

Mr. Thierry ZylberbergExecutive Vice President, Strategic Partnerships and General Manager, Health Business, France Telecom, France


McGill University

McGill University is one of Canada’s best-known institutions of higher learning and one of the country’s leading research-intensive universities. With students coming to McGill from about 150 countries, its student body is the most internationally diverse of any medical-doctoral university in Canada.

The oldest university in Montreal, McGill was founded in 1821 from a generous bequest by James McGill, a prominent Scottish merchant. Since that time, McGill has grown from a small college to a bustling university with two campuses, 11 faculties, some 300 programs of study, and more than 36,000 students. The University partners with four affiliated teaching hospitals to graduate over 1,000 healthcare professionals each year.

Co-sponsor

27

Contacts

If you have any questions or additional considerations, please do not hesitate to contact us.

David Levy, MDGlobal Leader, Healthcare, [email protected]

Denis von HoesslinHealthcare Leader, South Africa, PwC [email protected]

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisers.

© 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.

Please see www.pwc.com/structure for further details.

bending the cost curve global best practices · bending the cost curve global best practices 1–2...

Documents